What is Profit margin?
Profit margin is profit as a percentage of the selling price: (price − cost) ÷ price × 100.
Example
A product that costs $60 and sells for $100 has a 40% margin.
Why it matters
Margin tells you how much of each sale you keep — and caps how much you can spend on ads, fees and discounts.
Calculate it: Profit Margin Calculator
Margin from price, or price from margin
Flashcard
What is profit margin?
Tap to reveal the answerProfit margin is profit as a percentage of the selling price: (price − cost) ÷ price × 100.
Related terms
Markup
Markup is profit as a percentage of cost: (price − cost) ÷ cost × 100.
Gross margin
Gross margin is revenue minus the direct cost of the goods sold, as a percentage of revenue. It excludes overheads like software and salaries.
COGS
COGS is the direct cost of the products you sold in a period — usually the landed cost of each unit sold.
Read more in our guide: Profit Margin vs Markup: The Difference That Costs Sellers Money